Russia, Saudi Record Cuts Fail to Lift Oil Prices

• Russia, Saudi Record Cuts Fail to Lift Oil Prices

The globally anticipated meeting between giants oil producers, Saudi Arabia and Russia, failed to lift oil prices despite announcing a record production cuts.

On Thursday, OPEC plus tentatively agreed to cap production by around 10 million barrels per day in May and June, according to delegates.

Saudi Arabia and Russia, the two biggest producers of the group, agreed to reduce production to around 8.5 million barrels per day each and other members agreed to cut oil production by 23 percent.

However, this failed to lift oil prices as traders put the total drop in crude demand at around 35 million barrels a day. Indicating that global oil glut remains about 25 million barrels per day despite the almost 10 percent reduction.

The brent crude oil, against which Nigerian oil is measured, declined from $36 per barrel on Thursday during the Asian trading session to $31.96 a barrel after the virtual meeting.

The US West Texas Intermediate declined to $23.42 barrel, down from $28.31 per barrel.

All attention is now on the G20 energy ministers’ meeting scheduled for Friday. One of OPEC plus delegates said the cartel expects about 5 million barrels per day reduction from the group, adding that the OPEC still plans to cut more even if the group does not join the cartel’s agreement.

“Covid-19 is an unseen beast that seems to be impacting everything in its path,” Mohammad Barkindo, secretary-general of the Organization of Petroleum Exporting Countries, said in a speech at the online gathering. “The supply and demand fundamentals are horrifying” and the expected oversupply, particularly in the second quarter, is “beyond anything we have seen before.”

Barkindo estimated global oil surplus in the second quarter at about 14.7 million and urged other global oil producers to join OPEC in reducing global oil glut.